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Case law: Head landlord cannot directly terminate assured shorthold tenancies granted by intermediate tenant

A landlord granting a head lease to a tenant who can then create assured shorthold sub-tenancies over the premises’ residential units, should ensure the lease requires the head tenant to serve a s21 notice to quit on the sub-tenants, if it is itself served with notice to quit by the landlord, a recent ruling makes clear.

February 2019

This update was published in Legal Alert - February 2019

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

A head landlord granted a head-lease to a tenant of a building containing residential flats. The tenant let some of these flats to sub-tenants on assured shorthold tenancies. One way to recover possession of a flat from an assured shorthold tenant is for their ‘landlord’ to serve a s21 notice on them. The notice given must be at least two months.

The head landlord served notice to quit on its tenant under the head lease, terminating it from 19 March 2016. The notice also said that it was intended to act as a s21 notice terminating the assured shorthold tenancies that the head tenant had granted to the sub-tenants.

When the notice expired and the head landlord tried to gain possession of the building, the assured shorthold tenants argued that they had not been given a proper s21 notice. They said only their immediate landlord – the head tenant - could give them a s21 notice

The Court of Appeal ruled in the sub-tenants’ favour. It said that a s21 notice had to be served by the individual or entity that was the shorthold tenants’ immediate landlord at the date the s21 notice was given. As the head tenant was still the sub-tenants’ immediate landlord at that date (and would be until 19 March 2016), but the purported s21 notice was given by the head landlord, it was not a valid s21 notice.

The Court said it would have been possible for the head tenant to have given a valid s21 notice to the shorthold sub-tenants, even if the two months’ notice would expire after the head tenant ceased to be their immediate landlord. It was therefore open to a head landlord to include provisions in a head tenant’s lease requiring the head tenant to serve a s21 notice on their assured shorthold sub-tenants if the head landlord served notice to quit on the head tenant.

Operative date

  • Now

Recommendation

  • A landlord granting a head lease to a tenant who can create assured shorthold sub-tenancies over residential units in the premises should ensure the lease requires the head tenant to serve a s21 notice to quit on the sub-tenants if it is itself served with a notice to quit by the landlord.

Case ref: Barrow and other v Kazim and others [2018] EWCA Civ 2414

Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.

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